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a question of beneficiary ira's
Old 03-18-2011, 10:20 AM   #1
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a question of beneficiary ira's

Question: my wife is inheriting 1/5 of her parents IRA who died last year. (Technically speaking, her Dad's estate is the IRA beneficiary and she is getting her 1/5 after it is first rolled to the estate) The broker sent us about 40 pages of forms to fill out in order to setup a beneficiary IRA to receive her portion of the IRA.

Our goal is to move the account to Fidelity at some point (ASAP), where we keep the rest of our retirement assets in order to keep our financial profile simple (less companies to deal with).

Does anyone know if she is required to first create the account at her Dad's broker and then transfer the money, or is it just possible to setup the benficiary IRA at Fidelity in the first place? I hate to give a company almost 40 pages of personal information (income, assets, employment, size of my underwear and just about everything else), if our plan is to move the money immediately anyway.

Thanks.
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Old 03-18-2011, 10:22 AM   #2
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Quote:
Originally Posted by farmerEd View Post
Question: my wife is inheriting 1/5 of her parents IRA who died last year. The broker sent us about 40 pages of forms to fill out in order to setup a beneficiary IRA to receive her portion of the IRA.

Our goal is to move the account to Fidelity at some point (ASAP), where we keep the rest of our retirement assets in order to keep our financial profile simple (less companies to deal with).

Does anyone know if she is required to first create the account at her Dad's broker and then transfer the money, or is it just possible to setup the benficiary IRA at Fidelity in the first place? I hate to give a company amost 40 pages of personal information (income, assets, employment, size of my underwear and just about everything else), if our plan is to move the money immediately anyway.

Thanks.
Call Fidelity, they can very likely get the money for you the way you want it handled.

Ha
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Old 03-19-2011, 12:39 AM   #3
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Who is the executor? They should be handling this. Talk to the executor and after "Ha"'s advice...my next advice is to call the annuity company and get all the ifs, ands or buts.

Is the annuity company going to "retitle" the IRA in the name of the estate at which point it can be split into 5 parts or is the annuity company going to pay it out to the estate? Their paperwork says "to the estate"...and so...my guess is that might be what they do. If they do that, it might trigger a taxable event.

I handled 2 benficiary IRAs for 4 beneficiaries when my Mom passed and it was a bear. She did not leave either to her estate...so your situation is different from mine.
With one, the annuity company was able to "split" the IRA into 4 parts BEFORE any transfers out..maintaining the deferred tax status.(but remember it was not left to her estate so we could easily do this). Each beneficiary took over their own part at that point. Each made their own decision for how they wanted to handled the payout..etc. At this point, the receiving institution handled the transfer in.

Due to some wording on the beneficiary statement on her other IRA, we were able to "disclaim" it, which forced it into her estate for the specific purpose that her estate would pay the income tax. It was like she "left it to her estate". Why did we do this? It reduced the overall affect of the marital trust on my Dads future estate and allowed more "net" dollars of my moms exemption amount to flow to her beneficiaries (so the exemption amount was not taken up with tax dollars).

My point to all of that...is...that if your wifes Dads IRA is paid to his estate, his estate may owe the income tax. So the big question for the annuity company is....are they Rolling it to the estate or Paying it to the estate. Big Tax differences there. The broker has no control over what the annuity company is going to do.

Of course I say that because the broker on my moms IRA was no help at all.....
the longer....the situation was not resolved...the more money he made....
Hopes this helps some....
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Old 03-19-2011, 01:34 AM   #4
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Sounds highly technical. Might want to ask at fairmark.com (retirement subforum) and get Alan S. to reply.
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Old 03-19-2011, 08:31 AM   #5
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It wasn't without potential pitfalls...that is for sure "kaneohe". The annuity company gave us only 3 options. (1) Lump Sum (2) Five year payout or (3) Annuitize for life
Things may have changed since then - don't know.
And my broker....actually told me his company could NOT transfer in an inherited IRA. (Wachovia or Merrill Lynch at the time). Yes, I understood him correctly as we had many conversations about it. I still fume over that one. He's not my broker anymore.
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Old 03-19-2011, 08:57 AM   #6
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This is a pretty good book that deals with this topic. I can't recall the specifics, but he lays out the land mines in passing on IRAs.

Amazon.com: The Retirement Savings Time Bomb . . . and How to Defuse It: A Five-Step Action Plan for Protecting Your IRAs, 401(k)s, and Other RetirementPlans from Near Annihilation by the Taxman (9780143113362): Ed Slott: Books
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Old 03-20-2011, 11:55 AM   #7
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I am curious why they are asking for all of your personal financial information and whether you are required to provide it. It sounds like an "advisor" covering their fiduciary responsibilities before advising you to blow your money. But if you don't want advice they should not need the info.
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Old 03-22-2011, 05:55 PM   #8
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Excellent recommendation. I hope he updates this book soon to reflect any recent tax changes. Even without updates, it's a very worthwhile read.
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Old 03-22-2011, 06:46 PM   #9
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Excellent recommendation. I hope he updates this book soon to reflect any recent tax changes. Even without updates, it's a very worthwhile read.
Ed Slott has come out with 6 more items (books, workbooks and DVD) since this one. He's also on PBS and the DVD is called Stay Rich Forever and Ever. Check your local library.
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Old 03-22-2011, 07:50 PM   #10
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Ed Slott has come out with 6 more items (books, workbooks and DVD) since this one. He's also on PBS and the DVD is called Stay Rich Forever and Ever. Check your local library.
Thank you! My shopping list just got a little bit longer.
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